PROVIDENCE — Former Rhode Island Governor Lincoln D. Chafee says former CVS Health executive Helena Foulkes “should face hard questions about 38 Studios” as she launches her campaign for governor.
Chafee said that in 2012 he replaced Foulkes as vice chair of what was then the state Economic Development Corporation board because she supported additional tax credits to try to save the foundering video game company.
Foulkes, a Democrat who announced on Wednesday that she’s running for governor in 2022, was not on the EDC board in 2010 when it approved a $75 million state loan guarantee for 38 Studios, the ill-fated video game venture launched by former Boston Red Sox pitcher Curt Schilling.
But Chafee said that at a “very critical juncture” in 2012 Foulkes supported the idea of extending $15 million in additional tax credits to 38 Studios, which was struggling financially.
“I disagreed vehemently,” Chafee said Wednesday. “They couldn’t give us a good reason why that would lead to success. It shows terrible financial judgments. There was no explanation of what we call the bridge to success. I call it a bridge to disaster.”
On Thursday, Foulkes issued a written response to Chafee, saying, “I think Linc and I remember this differently.”
When asked to elaborate on how Foulkes remembers it, her campaign manager, Emma Caccamo, said, “That’s what I have for you today.”
Karl Wadensten, the only EDC board member to vote against the 38 Studios deal, said that in 2012 the board looked at a variety of options to keep 38 Studios from going under, including the idea of additional tax credits, but he said Foulkes was not pushing to give Schilling an additional $15 million in tax credits.
“There was a lot of money on the line, and most board members looked at it as a business proposition and a potential big loss for the state,” Wadensten said Thursday. “So we were exploring every avenue conceivable. This was a plane that was in SOS, and we were looking at: How do we control the landing to save the citizens of the state of Rhode Island big money?”
Wadensten said Schilling was asking for additional tax credits to keep 38 Studios alive. “They were clawing and grasping at whatever revenue streams they could get from the state,” he said. “It was survival at that point.”
And additional tax credits were among the options being discussed by the EDC board, Wadensten said. “When you have a group trying to avoid a big crash, you have to explore everything,” he said.
But Foulkes was “very deliberate” and “very thoughtful” in analyzing the situation, he said, and the entire EDC board was working hard “to meet our fiduciary responsibility for the citizens.”
Chafee, who was chair of the EDC board, said the board never took a vote on the additional tax credits because EDC attorney John Savage made a compelling argument against such a move. But if there had been a vote, the board might have approved the additional tax credits “with Helena leading the charge,” he said.
“I was so disappointed in her performance, I replaced her as vice chair under my ability to do so as governor,” Chafee said, noting that he named Jerauld Adams as vice chair. He said he did not have the power to kick Foulkes off the board, but she resigned soon afterward.
In May 2012, Foulkes announced her resignation from the EDC board, saying, “I have discussed with the governor his plans for the board at the EDC, and I think it is best at this time I resign. I wish him good luck in this very difficult challenge.”
Chafee — a Republican-turned-independent who later became a Democrat and then a Libertarian — had appointed Foulkes to the EDC board, and she was a member of his transition team. After she stepped down, Chafee replaced her with Dr. Pablo Rodriguez.
The EDC (now the Rhode Island Commerce Corporation) approved the 38 Studios loan guarantee under then-Governor Donald L. Carcieri, a Republican, and Chafee campaigned against the deal.
In October 2016, Schilling wrote a Providence Journal opinion piece headlined “Inept Chafee helped doom 38 Studios.”
“Would Rhode Islanders want to know why the ace he appointed to the EDC, Helena Buonanno Foulkes, resigned her position days after a meeting between 38 Studios and the EDC? I know why, because I was there,” Schilling wrote.
“Mrs. Foulkes, who, by the way, is as professional and intelligent as they come, came to 38 Studios during the final three months.” he wrote. “She sat down. We spoke. We showed her everything. She was in lockstep with where we were and what we needed to do.”
But the additional tax credits were never approved, and Schilling said Chafee did nothing to help 38 Studios.
Chafee called the 38 Studios agreement “the biggest mistake in Rhode Island history,” saying, “The absurdity of that whole initiative is just unbelievable.”